The view from the acquisition and fund-raising market is improving. More off-market opportunities are presenting themselves, as current sponsors and existing lenders look for solutions well in advance of loan maturity dates.
Lenders seek to address the issues on a problem loan before it reaches maturity to avoid the massive losses caused by posting or ultimately, foreclosure. These are lessons learned from the hard days experienced in the late 1980s and early ’90s.
Patience for investors continues to be the key, as the banks are just starting to sell loans. This is evidenced by more than $10 billion sold in the 4th quarter of 2010, of which $4 billion was non-performing commercial real estate loans.
Of the 10 assets that we have offered on in the last six to nine months, only one was a competitive-bid situation. That is not where we want to play; what have you accomplished by outbidding 20 other smart, shrewd real estate investors?
As far as financing these new acquisitions, new funding sources are presenting themselves every day, and the competition to make loans for quality projects is intense. Interest rates and terms have been very compelling, but we wait to see if inflation will creep into the picture …
Jim Yoder is a principal and managing director of Valeo Real Estate Fund. Contact him at [email protected]